Why Airbnb Owners Are Making Less Money in Competitive Short-Term Rental Markets

Brendan Davis (00:00)
Yeah, right now we’re really trying to concentrate on owner education through our owner relations side. ⁓ so much has changed recently, especially in the Smokies, it’s becoming more more competitive. you know, people are, a lot of property owners aren’t paying attention to what’s going on. They just, they bought their investment five, 10 years ago, maybe even a few years ago. And people are just kind of scratching their heads like, why am I not making as much money as I used to be?

Michelle Tack (00:27)
Hi, welcome to Real Estate Pros podcast. I’m Michelle Tack, the leader for today’s podcast, and I have a great person that we want to introduce you to is Brendan Davis. Say hello, Brendan.

Brendan Davis (02:12)
Hey, glad to be here.

Michelle Tack (02:13)
Yeah, we’re psyched about you being here. I really enjoyed our conversation, getting prepared for the podcast. And one of the things that I think that you bring to the table for people listening is, you you specializing in short-term rentals, but you’ve been able to do that and increase the volume of rentals that you’re doing to over a hundred in three years.

and you have a very high rating on Airbnb in terms of your ⁓ success and your experience. for those that may not know your world, i.e. what you do, can you go into what you’re doing and what markets you serve, please?

Brendan Davis (02:52)
Thank

Yeah. So I currently own a management company called Magnolia Vacation Rentals in the Smokies. So Pigeon Forge, Gatlinburg, Tennessee area, and another one in Nashville. So we manage about hundred doors over in the Smokies, a few in Nashville right now. So that’s the new branch. And I own three short-term rentals myself in the Smokies as well.

Michelle Tack (03:22)
That’s awesome. When we think about your business, which is incredible, you’ve got to get that level of Airbnb through those short-term rentals rating. Something has to be working like a machine in your business. Can you talk about why and how you get it to that level from it operating to the level of excellence that you expect? What are you doing to do that?

Brendan Davis (03:48)
A lot of it’s been trial and error. I’ve got a really good operations officer now and he’s really good at holding people accountable. So all our cleaners, our maintenance vendors and things like that. And we’re constantly pulling quality reports and looking at, here’s what went wrong. How can we prevent this from happening again? What type of systems can we put in place?

Michelle Tack (04:12)
So how many systems do you have in place right now that you’re using to smooth the whole process out in terms of the software or just ⁓ your standard operating procedures?

Brendan Davis (04:23)
Yeah, we’ve got quite a few. mean, one of the biggest things we’ve been using is Resort Clean and it communicates through an API with our property management software. We use OwnerRez. It’s pretty, it’s more of a, probably one of the least user friendly ones out there, but it’s the most robust overall. And it’s great, especially if you’re going to run a large scale operation, but the two communicate with each other, schedules all our turns, our cleans and everything like

Michelle Tack (04:33)
Mm-hmm.

Brendan Davis (05:37)
Cleaners get to communicate on it.

Michelle Tack (05:36)
huh.

Brendan Davis (05:39)
check in, check out. that really helps at scale. we have some quality control systems in that app that they’re using to help us see what’s going on in the properties.

Michelle Tack (05:48)
That’s awesome.

That’s great.

Yeah, the other thing that impressed me when we spoke is that you said to me, I tell investors things that others won’t tell them. ⁓ Can you talk to that a little bit about being honest and direct in your business dealings?

Brendan Davis (06:06)
Yeah, there’s a lot of, I’ve noticed that especially over in the Smokies, when someone’s shopping management companies, a lot of people are throwing out really, you everybody wants projections.

Michelle Tack (06:20)
Mm-hmm,

right.

Brendan Davis (06:21)
And I personally, it’s especially when people are looking at personally, if you’re shopping for a vacation rental, don’t call management companies and ask them for projections. need to figure if you’re going to be buying that product, you need to, you need to run those projections yourself and figure out what that property is capable of producing rather than relying on someone else to do that. But there’s definitely a lot of like they want, everybody wants the business, right? so there are a lot of.

over promising to try to get that business. People throw out really high gross numbers that probably are never going to be achieved just to get that contract signed. And you know, we’re pretty conservative, but also realistic at the same time. I’ve actually got contract signed, come in $30,000 under a couple of competitors, you know.

Michelle Tack (07:10)
Yeah, that’s amazing. own some. was living in California as a VP of technology company and I bought ⁓ property in Fountain Hill Scottsdale ⁓ area and in a great time it doubled in price. But when I found out, because my eye was not on the ball, like you said, I was too involved in work that the management person or company was every time I would get this bill that they needed to fix the pool. It was like 350 bucks.

My dad lived in Scottsdale and went over there and they were just making it up. I’m not suggesting all are like that, but it really, I I would pay more than $4,000 in excess of fees because of that. So, ⁓ you know, I definitely am and can also see the, you know, you know, the negative part, you know, when you’re renting your place out or what have you. Let’s talk about a time every operator has where

you know, a deal or a situation, maybe it’s a tenant, short-term tenant where things go sideways. ⁓ And you had to pivot and to ⁓ address the situation and make that client from an unhappy client to happy client. Can you talk to that ⁓ as an example of something you may have done in the past?

Brendan Davis (08:31)
Yeah, so it’s typically not going to be on my side. ⁓ guest communication team has those things happen quite a bit. One of the things I try to do is just like go be extremely generous and compensate. Cause I think one of the things you have to look at, especially on the guest side is that, and this is something I find that a lot of people in the short-term rental industry don’t do is you kind of have put yourself in their shoes, right? They’re already typically.

Michelle Tack (08:37)
Mm-hmm.

Brendan Davis (08:56)
People that go on vacations can be stressful, especially with their family. Sometimes they have the nagging uncle with them or somebody like that. All these things, especially in some of the larger cabins and stuff like that, happens, right? You’ve got the grandmother books a place for the whole family and you’ve got that one person that is stressful, right? All the logistics of traveling and stuff. And then somebody shows up and something unpreventable happens, the air conditioner is out.

Michelle Tack (09:05)
Hey

Brendan Davis (09:24)
the pull heater goes down, you know, the hot tub as an issue. And all the stress from all these different factors end up bundling up together. And now the one thing that’s going wrong ends up being a big deal, right? And that’s who sometimes we end up taking the, you know,

Michelle Tack (09:28)
Right, exactly.

Mm-hmm.

Brendan Davis (10:20)
the brunt of that. But yeah, exactly. So, you know, we always just try to look at it from that perspective and just like,

Michelle Tack (10:20)
The heat?

Brendan Davis (10:28)
They’re there for vacation, they’re there have a good time. Our goal isn’t to… Our goal is to provide a relaxation or a vacation for those individuals, not just extract every bit of revenue out of that particular booking. So, we have to make sure if we… We’re generous, right? If our refunds do, or we need to move them to a different place. There’s been times where the cleaners have messed up and we end up buying them dinner.

Michelle Tack (10:57)
Yeah, well, that’s great. mean, you’re trying to we talked about this as well here in a second. I’m actually the same question, but trying to get ahead of the curve, you know, be anticipate needs, et cetera, which it sounds like you’re doing. And if it doesn’t work out yet, you know, in one case you bought them dinner, which is great. What would you say are some of the areas of opportunity that you’re looking for yourself in the next six months to a year that

You know, you want to concentrate on.

Brendan Davis (11:27)
Yeah, right now we’re really trying to concentrate on owner education through our owner relations side. ⁓ so much has changed recently, especially in the Smokies, it’s becoming more more competitive. you know, people are, a lot of property owners aren’t paying attention to what’s going on. They just, they bought their investment five, 10 years ago, maybe even a few years ago. And people are just kind of scratching their heads like, why am I not making as much money as I used to be?

Michelle Tack (11:54)
Yeah,

right.

Brendan Davis (11:55)
So really one of the things I’m really trying to push people like when I have conversations with them, I’m like, Hey, when’s the last time you looked at your competitors in the market? And most of them are like, I don’t like, okay, check it out. You’ll be shocked. ⁓ so I’m really trying to push more education. Like here’s what’s actually here’s what’s occurring in the market right now. Here’s, here’s some data. Here’s what you need to know. Here’s what your competition is doing. ⁓ and here’s what a lot of it is like.

you know, everybody wants to be in that top 10 % of the market. When a competitive market, that’s really hard. you know, pushing out on information, here’s what the top 10 % looks like. Here’s what they’re doing to generate those type of returns.

Michelle Tack (12:28)
Okay.

Mm hmm. That makes sense. That makes sense. Lastly, we had talked about how networking can be really crucial to obviously real estate, but in particular your business because you own, you know, in two different areas, you know, two locations. You’ve got a number of units for short term smoking mountains. And I think you said Nashville, Tennessee as well. ⁓

Help me understand what you do specifically to network that may help some of folks that are listening today.

Brendan Davis (13:12)
Yeah, for one, especially in Nashville, I live near there. So I’m trying to go to all the events I can go to for networking.

Michelle Tack (13:19)
what ⁓ specific events do you go to?

Brendan Davis (13:22)
I

look for real estate meetups and stuff like that. That’s really how I got started. Same thing in the Smokies, but a lot of times I end up, you know, building relationships with vendors, maintenance people and stuff like that. And the overwhelming majority of our inventory has came from those networking connections. So I don’t run any leads. I don’t do any pay-per-click stuff. ⁓

Michelle Tack (13:27)
Mm-hmm.

Brendan Davis (13:44)
no ads like that at all. So everything’s been 100 % organic and it’s all been from connections that I’ve made.

Michelle Tack (13:46)
That’s great.

Wow, I didn’t realize that when we talked previously, you had not raised that. That is fabulous, truly, because that takes a lot of work. But I imagine there’s a lot of loyalty that’s been built up as well.

Brendan Davis (14:47)
Correct.

Michelle Tack (14:47)
So look, I really appreciate your time today. ⁓ Brendan, can you provide your contact information for those that may have some folks for your business or interested

partnering, investing, what have you? Can you give them your contact information?

Brendan Davis (15:04)
Yeah, the easiest way,

obviously the best thing is you can find me on social media, my Facebook profile. I got one those verified check marks, so you’ll know it’s me. And then it’s if you go to my profile, which is like a public page, just very apparent who I am and what I do.

Michelle Tack (15:18)
Can you, it’s Brendan Davis and the name of your company. Can you, okay, can you just spell it out for everybody, for those of us that aren’t good spellers?

Brendan Davis (15:21)
Yes, Brendan Davis. Magnolia Vacation Rentals

Yeah, of course. So Magnolia, M-A-G, let me hold on. I’ll mess that up too now since I’m on the spot. Yeah, Magnolia, M-A-G, N-O-L-I-A, then Vacation Rentals.

Michelle Tack (15:44)
You’ve been super forthright. love that you 100 % organic piece is fabulous and we wish you continued success in your operation and making it even better as you go forward. For those that ⁓ got value out of today’s podcast, please continue to check our real estate pros ⁓ podcast for other operators of different types of.

environments, everything from, you know, flipping to ⁓ vacation rentals to SFR to commercial real estate. And please ensure that you have subscribed to our channel. Again, Brendan, thank you so much. You did a great job.